Breakdown of losses into Likely to Develop or Not Likely to Develop categories in the annual rate filing.
In the rate filing, the “A” sheets (normally located in Appendix B) show individual classification rate development. Losses are categorized into either likely to develop or not likely to develop. Permanent Partial claims are not split into major and minor categories. Instead, other data elements captured in Statistical Plan data will be used to group claims into homogeneous categories. NCCI research has shown that, in addition to injury type, the part of body affected by the injury and whether the claim is open at a first report both affect how a claim will develop in the future. Therefore, these three claim characteristics are used to group claims into Likely to Develop and Unlikely to Develop. Here’s the breakdown:
| Likely | Not Likely |
|---|---|
| Fatal (at 2nd & Subsequent)Permanent Total | Fatal (at 1st report)Medical Only |
For Permanent Partial and Temporary Total claims, the classification depends on the part of body affected by the injury and whether the claim is open at a first report. If the claim is closed at a first report, the classification depends on the part of body affected by the injury. If the part of body has been shown to result in higher loss development, the claim is classified as Likely to Develop. Otherwise, it is classified as Not Likely to Develop. Examples of body parts that have been shown to result in markedly higher loss development are:
- Head, skull, brain
- Neck, vertebrae, disc, spinal cord, lumbar
- Internal organs, heart, lungs
- Upper and lower back, other soft tissues
- Multiple body parts at one time
Once claims have been classified as either Likely to Develop or Not Likely to Develop, there are again four sets of loss development factors applied to the Statistical Plan data for each policy period:
- Indemnity – Likely to Develop
- Indemnity – Not Likely to Develop
- Medical – Likely to Develop
- Medical – Not Likely to Develop
